You are given the following budget data for a country that has both a central government and local governments.
Central purchases of goods 500
Local purchases of goods 250
Central transfer payments 200
Local transfer payments 100
Grants in aid (central to local) 150
Central tax receipts 800
Local tax receipts 150
Interest received from private sector by central government 25
Interest received from private sector by local governments 10
Total central government debt 1500
Total local government debt 0
Central government debt held by local governments 300
Nominal interest rate 10%
a) How much is the deficit for the central government, the local government,
and the total of the central and local governments?
The deficit for the central government is ...
The deficit for the local government is ...
The total of the central and local governments is ...
b) How much is the primary deficit for the central government, the
localovernment, and the total of the central and local governments?
The primary deficit for the central government is ...
The primary deficit for the local government is ...
The total of the central and local governments is...